Finance (No. 2) Bill

Brooks Newmark Excerpts

Wednesday 17th April 2013 Commons Chamber

[Chris Leslie]

I know that Members of the European Parliament have debated some of these issues earlier this week; indeed, they have this week instituted a cap on the bonus level. We will need to reassess behaviour under that new arrangement, but I reiterate that we are confident that the revenue could be used for the purpose of helping the young unemployed.

[Mr Brooks Newmark (Braintree) (Con)]

rose—

[Chris Leslie]

I want the Government to do the same, and I challenge the hon. Gentleman to support us.

[Mr Newmark]

That will never happen.

I apologise for missing the Minister’s opening remarks, but I was so excited by the shadow Minister’s remarks that I wanted to intervene. I understand that mathematics is not a strong point when it comes to Labour party policy. We have heard from the Minister that bonuses have come down from approximately £11 billion to £1.6 billion. He is proposing a 130% tax on people who receive bonuses, in respect of the current statistics. We have heard from my hon. Friend the Member for Wyre Forest (Mark Garnier) that the shadow Minister has not thought about the implications for the reduction in take-home from achieving the changes he wants to bankers’ bonuses, which will reduce the money coming in for the Exchequer, which I suspect means that his numbers will not add up. The question I really want to put to him, however, is whether his proposed reduction in bonuses relates purely to cash. If not, is he saying that if employees are given shares, which might have a vesting period of more than five years, the vest for that period will be taxed? Is it about cash, or is it about cash plus shares?

[Chris Leslie]

I get the sense that the hon. Gentleman is starting an accountancy line, perhaps thinking how best to advise these bankers of ways around that nasty Labour Government’s bankers’ bonus tax. I am sure that whether it be in Bitcoins, gold or shares, bankers will be ingenious in how they pay and reward themselves. We have to get a grip of it, though, because however much they lavish rewards on themselves, the Exchequer needs to keep pace with the arrangement. I accept that this is a fluid situation, with policy and banker remuneration changing at the European level, but we must capture this particular issue and not adopt the lackadaisical attitude that the Treasury has adopted so far.

--- Later in debate ---

[Chris Leslie]

Perhaps the hon. Gentleman will have a chapter in the pamphlet that the hon. Member for Bristol West (Stephen Williams) is writing; we would all be interested to read it. [Interruption.] From a sedentary position, I am offered a signed copy of that pamphlet. We are all interested in political memorabilia, and it would certainly be an historic document.

We wanted to retain the 50p top rate of income tax for this year. It should not have been cut, and we think that doing so is unfair. I know—well, I think I know—that in their heart of hearts, the Liberal Democrats do not really agree with the cut, which will of course apply to those earning £150,000 or more. We have to recognise the special responsibility that banks and banking executives have to wider society, given the massive cost to the taxpayer of the banking crisis and the resulting deficit, the consequences of which many of our constituents are still suffering. We still have not got justice for what happened in 2008, which is one reason why we think it important to take this step now.

[Mr Newmark]

Does the hon. Gentleman distinguish at all between those financial institutions over which the Government have some sense of control—a sense of public ownership—and which the taxpayer had to bail out, and those that did not need taxpayer support? Following that logic, if he really wants to have complete control of compensation and bonuses, does he therefore want to nationalise RBS?

[Chris Leslie]

No—that is a preposterous suggestion. The hon. Gentleman also needs to recognise that all banks have benefited from the implied guarantee of the taxpayer, even if they did not need to be bailed out. He knows very well that the whole banking sector has benefited for a long time, and continues to benefit, from the market expectation that, should a retail bank get into difficulty or become insolvent, the taxpayer will come to its rescue. That is an implied subsidy, for which the banks ought to compensate the taxpayer. That is part of the argument I am happy to make.

--- Later in debate ---

[Geraint Davies]

That certainly would be a charitable way of putting it. If financial targets are set and are under-achieved, the Government clearly need to redouble their efforts to deliver those targets. We need to continue to focus on generating joined-up systems to ensure that the money that is available delivers economic outcomes such as opportunity and jobs. The amendment is designed to create imaginative ways of generating opportunity and jobs for the future by using the money that is recovered. We should join together to do that. It is a modest amendment that we should all agree on. We should work together to build a stronger Britain.

I fear that the Government will say, “Oh no, we can’t possibly consider that.” That, alongside their failure to raise the money, would show that they do not have the focus to ensure that those with the broadest shoulders pay their way towards a more prosperous Britain. I fear that the Government will go back to the old Tory ways and say, “Let’s use this as an opportunity to crush the so-called undeserving poor” and pretend that there are workers and shirkers, whereas people just want to get out and get a job. Let us move forward and create a united Britain—a one nation Britain, dare I say—to create a future that works and a future that cares.

[Mr Newmark]

I apologise, Mr Amess, for popping out. I wanted to make sure that we had the right statistics at hand. I agree with the hon. Member for Swansea West (Geraint Davies) that those with the broadest shoulders should pay the largest amount of taxation. After the last Budget, notwithstanding the 5% cut, the top percentage of earners are paying more because of the other tax rises that we have brought in for them.

Unemployment is a tragedy for anyone who loses their job, and I am sorry for the individuals in the hon. Gentleman’s constituency who have in the past month lost their jobs. He spoke about the productivity puzzle, and I agree that that is a challenge. What is important to each of our constituents is surely that they have a job. The facts are that, year over year, unemployment is down by 71,000. Employment nationally is up 488,000 year over year. On jobseeker’s allowance, the figure that he looked to, year over year it is down by 60 people. That is not many, but the figure is down year over year in Swansea West.

[Geraint Davies]

In Swansea West jobseeker’s allowance numbers have grown by 40%. We have heard of employment levels going up and we have seen that overall output has not gone up, so there is the productivity puzzle, which is a kind way of saying that productivity—production per head—has gone down. All I am saying is that we should look at ways of giving people the tools to do the job, be it skills, building houses, or super-connectivity.

In the run-up to the Budget I got the business community in Swansea together to lobby the Chancellor to invest in a wi-fi cloud and super-connectivity for Swansea. Why should an inward investor come to the congestion and cost of London when they could hook up to the worldwide web in superfast time overlooking the wonderful Gower and the sun and sands of Swansea? That was worth while doing. We were not successful, and subsequently the biggest company in Wales, Admiral, wrote to the Chancellor pointing out that it is a global company and wants super-connectivity on a global basis to its clients and suppliers. That is the sort of investment that we want to make from the extraction from the excess profiteering of certain individuals in the banking community. The modest amendment would enable us to continue that dialogue with a view to taking action to deliver positive change for people who currently do not have enough opportunity.

[Geraint Davies]

That is completely right. Clearly, the economic model that must work is to have people making a contribution by being in work. There has been some debate about tax thresholds—with everyone saying how great they were—versus working families tax credit. Let us put ourselves in the position of someone starting a business who can only afford to employ someone for £10,000—£15,000 would not be viable; that is just the way that business works. Along comes working families tax credit, and a single mother, for example, can afford to work for £15,000, but not for £10,000. If the state makes up that difference, we end up with someone who can afford to work and make a contribution, and a business that is now viable. That is good. If that is simply stripped away and the tax threshold is increased to make it more worth while, it does not add up. That is one explanation for why we had such considerable job growth under the Labour party from 1997 to 2008.

Most people do not really understand working families tax credit. It is a way of integrating tax and benefits so that we cannot divide people into those in receipt of benefit and the workers, which is what Conservatives want to do for political reasons. They want to say that there are the workers and the shirkers and they are for the workers and the Labour party simply wants to support people sitting at home. That is the opposite of the truth. The Labour party is about enabling people to have pathways to prosperity through jobs. We should be using the fruits of engaging with the banking community, who make obscene amounts of money, and investing in skills and in communications, whether it be electrification of the railways or high speed rail, in wi-fi clouds, or in creating a global infrastructure in terms of R and D and our universities.

We have heard a lot of talk about the reduction in corporation tax from 21% to 20%, but that makes no difference to multinationals if the comparators are France at 33%, Germany at 29% and the USA at 40%. We are already competitive. But that 1% reduction is a 5% reduction in our tax yield from corporation tax. Would it not be better to spend that on helping universities to grow with industry? There is a good example of that in Swansea, which could be the fruits of what we are talking about today, where the second campus is being underpinned by £250 million from the European Investment Bank, and where Tata Steel, BP, other multinationals and the Welsh Government are engaged. Research shows that that sort of cluster of R and D attracts more and more big business and jobs, rather than just a marginal bit of corporation tax. We need to think cleverly about how to generate R and D engines. Brazil, for example, is spending £5.3 billion from development banks on getting into the global field of biotech. China and other countries are making similar investments. That is the way to organise ourselves in a joined-up way, rather than the laissez faire social and economic Darwinism of the Tories, where we see the weakest die and the greediest become more bloated as they exploit the world.

[Mr Newmark]

rose—

[Geraint Davies]

On that point, I will take an intervention from the hon. Gentleman.

[Mr Newmark]

I am enjoying the hon. Gentleman’s fascinating speech, and a philosophical divide is clearly developing. Does he really believe that it is best for a company to pay an extra 1% to Government, because they know how best to spend that money to create jobs? Or is it best to leave it with the company? Let us leave bankers aside, because I know that one is obsessed with those. Let us talk about the Tatas of the world, the manufacturers who historically have done a great job in Wales in creating jobs. Does the hon. Gentleman believe that it is best that that 1% extra goes to Government, because they are in a better position to create those jobs, than a company such as Tata, which would take that extra 1% and use it efficiently for R and D or job creation?